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Minimum wage odds and ends

Friday, Feb 8, 2019

* I told subscribers about this earlier in the week

Now the [minimum wage] bill is set to go to the House, where Speaker Michael Madigan told his caucus he will call and vote for it.

* Tribune

Illinois’ minimum wage of $8.25 has stood since 2010, even as Chicago and Cook County have raised theirs. Now the bill to raise the statewide wage moves to the House, where Democrats led by Speaker Michael Madigan could change the proposal before it lands on Pritzker’s desk. But top Democrats including the new governor said Thursday that they do not believe changes are needed. […]

“I anticipate the speaker will support the bill,” Madigan spokesman Steve Brown said after the Senate vote.

This sure looks like a go.

* WSIL TV

“I have a lot of people in small towns in my district that are worried that jobs are going to go to Missouri,” [Sen. Paul Schimpf, R-Waterloo] said.

The minimum wage in Missouri is currently higher than it is in Illinois, $8.60 vs. $8.25 per hour. If this current bill becomes law, Illinois’ minimum wage will rise to $9.25 an hour on January 1st of next year, but Missouri’s will rise to $9.35. Illinois, however, will surpass Missouri over the next 12 months, when this state’s minimum wage will rise by $1.75 an hour and Missouri’s will only go up by 75 cents.

* Capitol News Illinois

Although no Republicans voted for the bill – and several spoke against it on the floor, citing concerns about businesses leaving the state, unforeseen costs on schools and universities and the potential for job loss for low-wage employees – Pritzker said conservative voices helped shape the legislation.

“I talked personally with several senators to make sure their ideas were incorporated. I talked with many of the interest groups that represent businesses, and Republican interests, to incorporate those into the bill,” Pritzker said during a news conference in his office at which no elected Republicans were present.

He did talk to a lot of legislators and business groups, but this is basically the same bill that passed in 2017, except for I think the gratuities credit, which was kept in place at the behest of the restaurants. They are essentially the fig leaf providing political cover here. Not saying that’s a bad or good thing, just saying what it is.

* Public Radio

Republicans like state Sen. Dan McConchie from Hawthorn Woods argued there should be smaller increases downstate, where the cost of living is lower.

“A one size fits all approach is exactly the wrong solution for an aggressive measure of this sort,” McConchie said.

Sponsoring Sen. Kimberly Lightford, a Democrat from Maywood, said working class people across the state are struggling to exceed the poverty level.

“How do you tell your constituents that—that they don’t deserve to be paid fair wages because of the part of the state they live in?” she asked the Republican senators.

That’s basically the heart of the disagreement over regionalizing the wage.

* Pantagraph

Illinois State University President Larry Dietz said Thursday that increasing the minimum wage from $8.25 to $9.25 an hour — the first-phase increase in the legislation — “would cost us about $600,000.”

“The cost would be $7.5 million once the concept is fully implemented,” he said, referring to the $15 rate that would take effect in 2025.

* There was also talk yesterday during debate about the cost to Southern Illinois University Carbondale. So, I reached out to the campus spokesperson for the annual breakdown…

Hi Rich. The annual cost grows as the rate increases, culminating in $6.96 million annually in 2025. Increases are tied to the dates in the proposed legislation. Rounded, it looks like this:

    Jan 1. 2020: $664,000
    July 1, 2020: $585,000 (cumulative $1.25 million)
    Jan 1: 2021: $817,000 ($2.07 million)
    Jan 1, 2022: $912,000 ($2.98 million)
    Jan. 1, 2023: $1.05 million ($4.03 million)
    Jan. 1, 2024: $1.31 million ($5.35 million)
    Jan. 1, 2025: $1.61 million ($6.96 million)

* SJ-R

Before the Senate vote, Pritzker met with Senate Democrats for nearly 30 minutes to solidify support for the bill. Lightford said Democrats were given “reassurance from the governor that we will continue to work on budget concerns.”

Those concerns stem from schools, human services organizations and others who rely on state financing, but also must comply with the higher minimum wage.

“My administration will propose a balanced budget taking into account the effect of the new minimum wage,” Pritzker said. “Human services and social service organizations are going to have the resources they need to pay workers more.”

Where he gets that money is anyone’s guess.

- Posted by Rich Miller        

39 Comments »
  1. - Muddy River - Friday, Feb 8, 19 @ 12:16 pm:

    Enrollment down, minimum wage about to go up.

    Tough times for SIU-C. Another tuition hike? How much longer can it exist?


  2. - Dan Johnson - Friday, Feb 8, 19 @ 12:16 pm:

    Another way to look at all of these costs is they are direct infusions into those local economies to low-income workers.

    The multiplier effect of increased wages is pretty powerful stuff to generate prosperity.


  3. - My Button is Broke... - Friday, Feb 8, 19 @ 12:24 pm:

    Can we stop citing cumulative costs? Instead of saying it’ll cost $7.5 million once full implemented, say it’ll cost on average, about a million a year.


  4. - Occam - Friday, Feb 8, 19 @ 12:27 pm:

    Our school district completed the analysis that shows that our labor costs will spike 38% for those employees impacted by the new legislation.

    I was under the impression that the additional funds appropriated for education were supposed to go toward enhancing instruction through new hires, technology purchases, etc.

    Now it looks like whatever incremental funds that may come from the State EBF formula will be more than offset by the incremental labor costs incurred by the district under this legislation’s wage rate demands.


  5. - Michelle Flaherty - Friday, Feb 8, 19 @ 12:30 pm:

    If university executives are going to cry over paying a higher minimum wage maybe someone should take another look at the compensation and benefits taxpayers and tuition payers are providing to university executives.


  6. - Responsa - Friday, Feb 8, 19 @ 12:32 pm:

    ==-Can we stop citing cumulative costs? My Button is Broke… - Friday, Feb 8, 19 @ 12:24 pm:==

    Do you feel the same way about citing only yearly “minimum payment” on credit card costs rather than disclosing and addressing the cumulative costs to the borrower over time?


  7. - Oswego Willy - Friday, Feb 8, 19 @ 12:36 pm:

    ===If university executives are going to cry over paying a higher minimum wage maybe someone should take another look at the compensation and benefits taxpayers and tuition payers are providing to university executives.===

    Bitingly true.

    Someone tackle these people when they want to in one hand discuss impacts on raising minimum age, and while the discussion about fiscal thoughtfulness and higher ed is usually one where spending is at question, I dunno if choosing minimum wage is a hill to discuss isolated fiscal impacts


  8. - Nonbeleiver - Friday, Feb 8, 19 @ 12:41 pm:

    There badly needs to be a minimum wage hike. But this is large, even though it is spread out over a number of years, and there should have been a regional adjustment.


  9. - J. Nolan - Friday, Feb 8, 19 @ 12:45 pm:

    Michelle & Willy - so it was a red herring for Rauner to criticize administrative pay and bloat in universities but as soon as it’s those same universities simply detailing the costs over the next 60 months of min wage increases, they NOW should look in the mirror at their excessive spending. Got it.


  10. - wondering wendy - Friday, Feb 8, 19 @ 12:45 pm:

    I don’t get Kimberly Lightford’s comment, “How do you tell your constituents that—that they don’t deserve to be paid fair wages because of the part of the state they live in?” she asked the Republican senators.” Then how do you tell someone in Chicago that the 2 bedroom apartment they are renting is $2,000 a month and it is $550 dollars a month in Marion???? Having rented in both parts of the state I can tell you the cost of living is much less in Marion, and for the same apartment quality I paid much less. There is a difference. How this can be done fairly I am not sure, but don’t discount the difference in cost of living in southern and northern Illinois.


  11. - Oswego Willy - Friday, Feb 8, 19 @ 12:49 pm:

    Oh - J Nolan -, lol

    ===red herring for Rauner to criticize administrative pay and bloat in universities but as soon as it’s those same universities simply detailing the costs over the next 60 months of min wage increases, they NOW should look in the mirror at their excessive spending. Got it.===

    Rauner refuses to fully fund higher education for 3 fiscal years.

    You want to discuss bloated universities and Rauner, Rauner only funded universities at a yearly budgetary level once with his signature.

    See… words… actions?

    Get it? Got it? Good.


  12. - Brendan - Friday, Feb 8, 19 @ 12:49 pm:

    Wendy

    I’m from Harrisburg. That 550$ rent is offset by a tank of gas every three days to get to a job of any substantial pay. Let’s not forget the outrageous property taxes and overpriced electric bills.


  13. - Big Jer - Friday, Feb 8, 19 @ 12:51 pm:

    ===Where he gets that money is anyone’s guess===

    What Michelle said above AND how about restoring higher education funding at the fed and state level to what is used to be?

    https://www.cbpp.org/research/state-budget-and-tax/funding-down-tuition-up

    From the above link:

    ===Per-student funding in nine states — Alabama, Arizona, Idaho, Illinois, Kentucky, Louisiana, New Hampshire, Pennsylvania, and South Carolina — is down by more than 30 percent since the start of the recession==

    And I am sure the budget impasse just poured salt on the wound.


  14. - SaulGoodman - Friday, Feb 8, 19 @ 12:55 pm:

    ** this is basically the same bill that passed in 2017, except for I think the gratuities credit, which was kept in place at the behest of the restaurants. **

    SB81, from 2017, did not touch the gratuities credit. The main differences between SB81 and this new bill are:
    - Slower ramp to $15
    - Slightly higher wage for teens
    - Tax credit is structured differently


  15. - Steve - Friday, Feb 8, 19 @ 1:00 pm:

    Where’s the money going to come from ? Layoffs and higher prices for those business that can pass on costs. Those that can’t will shut down. The minimum wage doesn’t guarantee employment : it just makes it illegal to paid people below a certain amount.


  16. - JS Mill - Friday, Feb 8, 19 @ 1:02 pm:

    =Our school district completed the analysis that shows that our labor costs will spike 38% for those employees impacted by the new legislation.=

    First, your statement, while dubious, is unclear. Are you trying to say that it will increase costs 38% for hourly workers or your entire payroll? If you are saying your entire payroll will go up 38% I just don’t believe you.

    Maybe, if you are talking about 2025, which would make your statement disingenuous, but definitely not for 2020.

    Your teachers and other salaried workers are not impacted and that is the bulk of school payroll.z

    Plus, you would need to back out typical wage increases to determine a legit cost increase. Unless your district doesn’t give raises and in the case that is pathetic.

    If you are paying bus drivers minimum wage, I wouldn’t want to put kids on your buses.

    I looked at our CBA and the increase wouldn’t change anything until 2021 and only for a couple of categories. Full disclosure- our support staff are paid pretty well compared to other central Illinois schools.


  17. - Michelle Flaherty - Friday, Feb 8, 19 @ 1:07 pm:

    J Nolan, Rauner thought the entire concept of regional public higher education institutions was bloat and tried to starve it out of existence.
    I’ve long been a critic of excessive executive compensation coming from taxpayers and tuition payers.
    So when some an executive making six figures who also likely gets a free car, free house, free country club membership, etc, etc tells me of the horror of a higher minimum wage there’s just something in me that feels the need to speak up.


  18. - Anonymous - Friday, Feb 8, 19 @ 1:17 pm:

    Reduced hours to Steve. Employers, especially those downstate will be forced to reduce employment and or hours worked.


  19. - RNUG - Friday, Feb 8, 19 @ 1:22 pm:

    == Reduced hours to Steve. Employers, especially those downstate will be forced to reduce employment and or hours worked. ==

    You may see some businesses, especially small ones, reevaluate their business hours and eliminate some marginally profitable ones. Maybe open later and close earlier? Or copy the Spanish / Mexican model of a siesta closing from 2-4pm?


  20. - wordslinger - Friday, Feb 8, 19 @ 1:22 pm:

    –“I have a lot of people in small towns in my district that are worried that jobs are going to go to Missouri,” [Sen. Paul Schimpf, R-Waterloo] said.–

    …where there’s a higher minimum wage now, and where there will be a higher minimum wage through all of 2020 if the current bill passes.

    Geez, make an effort, dude, just so you don’t reveal how ignorant you are on the issue.


  21. - Thomas Paine - Friday, Feb 8, 19 @ 1:34 pm:

    @Occam -

    Please post a link to that analysis. What school district?

    I find it a little incredible, since the bill won’t change any collective bargaining agreements and there probably are not that many people making minimum wage…maybe some support staff?


  22. - TheInvisibleMan - Friday, Feb 8, 19 @ 1:36 pm:

    If the minimum wage has to be adjusted for the region, shouldn’t the state tax collection rebated back to areas be adjusted for region as well?

    Why does small town IL need a fincial parity with Chicago in what is being sent back to them by the state? But when setting a minimum wage, they have to be treated differently?

    This is of course just a thought experiment.


  23. - Scamp640 - Friday, Feb 8, 19 @ 1:41 pm:

    The disingenuous of Republicans expressing concern about the impacts of a minimum wage hike on higher education. I don’t believe for a second they care about higher education. Their behavior during the Rauner Budget impasse proves their willingness to damage public universities when it serves their purpose.


  24. - Lester Holt’s Mustache - Friday, Feb 8, 19 @ 1:48 pm:

    ==Illinois State University President Larry Dietz said Thursday that increasing the minimum wage from $8.25 to $9.25 an hour — the first-phase increase in the legislation — “would cost us about $600,000.”=

    So ISU can afford to pay head basketball coach Dan Muller $600,000 annually, AD Lyons $276K per year, football coach Spack $300K per year, and Dietz himself $375K per year (plus a $50K per year bonus) - all numbers from the PJ-Star - but can afford to pay numerous ISU employees only $8.25 an hour.

    Probably those people don’t work as hard as these four gentlemen.


  25. - Oswego Willy - Friday, Feb 8, 19 @ 1:52 pm:

    Athletic department salaries may/may not be part of the budget running the university. They may be part of an athletic department fund outside the university.

    I dunno.


  26. - Downstate - Friday, Feb 8, 19 @ 1:58 pm:

    If hiking minimum wages are such a great economic driver we should immediately raise the minimum wage to $15/hour in East St. Louis.


  27. - dicey - Friday, Feb 8, 19 @ 2:18 pm:

    All these impact forecasts are just accounting for those at the very bottom of the wage scale. Those that make above minimum are expecting wage increase too. They have earned it also, but it will be very expensive, way above and beyond these numbers.

    How to pay for it all? I suspect the 4.95% flat tax is about to go up. Pritzker has no choice. He’s $3.5b behind and still spending.


  28. - Kayak - Friday, Feb 8, 19 @ 2:26 pm:

    As wages increase so will state income tax deductions. It will be interesting to see how much money this generates for the State. I’m unable to find any estimates for Illinois.


  29. - Simple Simon - Friday, Feb 8, 19 @ 2:29 pm:

    OW, studies have shown that most athletic departments are not financially self sufficient. Even most Big10 departments take funding from general funds, either directly or indirectly, so they are a net negative.


  30. - Oswego Willy - Friday, Feb 8, 19 @ 2:31 pm:

    - Simple Simon -

    ===studies have shown===

    Don’t care about studies.

    A budget shows the actual.


  31. - walker - Friday, Feb 8, 19 @ 2:31 pm:

    We, and need to see the details and assumptions to get a good handle on costs. Many businesses are claiming big risk numbers derived from their belief that if they raise the wages for their few lowest paid employees, it will require them to raise many other pay levels as well. Some school districts are throwing big numbers around this week, but they are talking about the potential minimum wage change for teachers — a different issue. Some just cumulate ten-year potential costs into one number.


  32. - Oswego Willy - Friday, Feb 8, 19 @ 2:41 pm:

    - Simple Simon -

    Did you factor in the B1G television deal, the bowl monies, the NCAA tourney monies…


  33. - BenFolds5 - Friday, Feb 8, 19 @ 3:04 pm:

    Thomas Paine.Collar county schools are increasingly run by support staff in many more areas than used to be. They even try to have had them cut to 35 hours to save benefits. This will absolutely eat into the budgets.


  34. - Shemp - Friday, Feb 8, 19 @ 3:08 pm:

    Let’s not forget Library districts that are property tax capped, small park districts that are tax capped hiring summer help and seniors for positions…. One size does not fit all.

    How is it we do prevailing wage county by county but not minimum wage???


  35. - The Dude Abides - Friday, Feb 8, 19 @ 3:27 pm:

    Well if you are wondering why the GOP is now a super minority in the Illinois Legislature this might give you a clue. Not a single GOP vote?
    Here’s how I see it. You need a balance between the needs of workers and businesses. The ILGOP is firmly beholden only to business interests.


  36. - Blue Dog Dem - Friday, Feb 8, 19 @ 3:34 pm:

    Senator Schimpf has at least two fairly large employers in his district looking to jump ship. I referred to those earlier in the week. They pay higher than the current min wage, but less than $15/hr. So there is some time.


  37. - Pot calling kettle - Friday, Feb 8, 19 @ 4:06 pm:

    Higher wages will, of course, result in more money for the state from income tax. I haven’t seen any numbers on that side, but it seems like there could/should be an estimate on the revenue impact. At least some of that money could be sent to universities and schools to help cover increased costs.


  38. - shiny objects - Friday, Feb 8, 19 @ 4:27 pm:

    “higher wages will result in more money for the state from income tax.” That’s shiny.

    Whatever money is in a business is already taxed. It just moves from one type of tax to another. Whether w2s for individuals (4.95%), scorp passthroughs (4.95%), or c corp (7%).

    GOP would/could have voted for an increase in minimum wage, just not that increase.


  39. - Techie - Monday, Feb 11, 19 @ 10:27 am:

    SIU isn’t U of I, but to make a point about budget priorities, when I attended U of I years ago they spent $80,000 to have Dan Rather come and speak. How many employees wages could that have funded?

    More importantly, how much are the top levels of staff making at these colleges and universities? They could probably afford a pay cut to ensure that their lowest-paid employees at least earn a living wage and don’t have to resort to SNAP and other safety net programs.

    As for businesses, as long as they have the capital, they will continue to pay their employees even at a higher rate. If their labor is needed to produce a good or service, the cost of that labor isn’t going to change whether or not it’s necessary.


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